“You can’t give the government the power to do good without also giving it the power to do bad – in fact, to do anything it wants. It is not so much the abuse of power which is a concern. It is the power to abuse” –Harry Browne

GO GATA!!!
Another fabulous day for gold. Despite a strong dollar and a weak stock market, gold managed a solid close into new all-time high ground, coming back from a PLAN A Gold Cartel assault. The positive gold action stood out most of the Comex trading session, but was particularly radiant on the Comex bell. It popped $2+ as a number of shorts panicked to get out of their positions going into the weekend.

The investment world is beginning to comprehend what the GATA camp has been saying for YEARS AND YEARS. The key to the gold price is the ability of the physical market to overpower The Gold Cartel, which is just what we are seeing at the moment. Up until recently, the commonly held notion was that the key to gold was the dollar. NOT SO! Numerous concerns are fueling demand for physical gold which is making life miserable for the cabal forces, irrespective to what the dollar does on the downside.

Silver did well also, coming back from a new low for the week of $18.12. Three times it approached key support at $18 this week and each time it rejected that price level. A huge technical positive.

The AM Fix of $1142.50 and PM Fix of $1140 were routine.

The gold open interest shot up 11,750 contracts to 538,709. Hello Gold Cartel. The silver open interest gained 1470 contracts to 141,208. Must be JP Morgan going shorter and shorter. I mentioned JP Morgan’s 40,000 contract short position in my Bloomberg interview with Bernie Lo.

All-time high gold close…

December gold http://futures.tradingcharts.com/chart/GD/C9 A glance at the weekly gold chart reveals a momentum building pattern…

What else is new? There is an option expiry Monday. The Gold Cartel’s drill over the years has been to take gold down into and on the option expiration day. The Gold Cartel does so to protect their massive short positions. In essence this is the US Government ripping off the general public, through their surrogates like JP Morgan Chase, in an attempt to thwart the free market system. The problem is the sheriff sworn to protect the law … in this case is the US Government and the CFTC. How do they get punished when they are the ones who are supposed to enforce the law?

What was stunning today was how the Gold Cartel got stuffed yet again with one of their standard planned attacks. We are seeing this “stuff” pattern time and time again of late.

The Gold Cartel’s traders don’t realize, or don’t know how to handle, the “new buyers.” In days of old they would suck in the spec longs, getting shorter and shorter as the price went higher and higher. Then they would pull the plug by dumping physical gold into the market and bombing the derivatives paper market. Eventually fund longs would sell as the technicals turned bearish. The market would cascade down with a number of funds eventually going short. The Gold Cartel would cover and up we would go again.

This time the buyers are the biggest of money … countries, largest hedge funds, etc. They are competing against each other and want to buy more gold on any dips The Gold Cartel hands to them. It shows in the price action.

At the Silver Summit this past September, the CPM Group’s Jeff Christian stood up to contest some of the statements I made as a speaker on behalf of GATA. He talked a bunch of nonsense, especially when he said he foresaw central banks buying gold and then predicted the price of gold would average $912 over the next decade. HUH?

Well, yesterday he was on CNBC and was asked about the Paulson move to open up his own gold fund in January. He extolled Paulson saying it was a good move. What a hypocritical turd! Why is that a good move if the price of gold is going to drop nearly $250 in the years to come? This guy is a joke like his counterpart, Kitco’s Nitwit Nadler.

The leaders in the gold industry are the most clueless bunch in history … of any industry. Christian is one of them, along with the usually wrong and bearish GFMS, the official gold statisticians. A few weeks ago they told a very respected dean of the industry they couldn’t imagine gold staying up at these prices. Gold was about $1,000 at the time.

Then you have the World Gold Council who rebuffed GATA this past decade and who, until recently, was pitching high fashion jewelry and ignoring gold’s investment value. That brainchild pitch while gold has been in a nine year historic bull market run.

Then, how about the leading gold producers like AngloGold and Barrick. Talk about lightweights! While decrying GATA, mocking us, and calling us nuts from 1999 on, they hedge years of forward production at $300, plus or minus. Can you imagine an oil producer hedging at $10 or $15 per barrel?

GATA ranted to whomever that would listen about what fools they were and of their complicity with The Gold Cartel. Fast-forward nine or ten years later. Barrick has to raise nearly $6 billion to close out hedges they still have on their books, compounding other billions of hedge losses already taken. Who knows how many billions AngloGold has lost and will lose?

Then last week at a London gold conference, the newer CEO’s of each those companies told reporters they were looking for gold to retreat to $900 per ounce in a correction mode. Talking their debilitating hedge book maybe, wouldn’t you say? That’s what they get for listening to bullion bankers Goldman Sachs, JP Morgan Chase, GFMS and the CPM Group instead of GATA. That’s what they deserve for not dealing with the ramifications of the gold price suppression scheme which were so obvious so long ago now.

And talk about this irony. If it weren’t for GATA. Barrick would have blown up by now. The logic…

GATA’s Reg Howe sued The Gold Cartel … including the BIS, Fed, and Treasury in Boston District Court. The judge dismissed the case without making one negative comment regarding what Reg presented, only declaring Reg did not have the correct legal standing to bring such a case, but a gold company would.

So, Blanchard Coin sued JP Morgan Chase and Barrick Gold in New Orleans Federal Court for rigging the gold price. Months later Barrick Chairman Peter Munk and his CEO were in London extolling the value of their hedging policy and their “Evergreen Clauses” in which their bullion bankers would rollover these hedges forever.

The next day at this gold conference, they renounced putting on any new hedges. It was part of an out of court settlement with Blanchard Coin. Munk had to sit in for his CEO who immediately flew to New Orleans.

If it weren’t for GATA and then Blanchard, the Barrick fools probably would have kept on hedging. At their zenith Barrick had on 20 million ounces worth of hedge positions. Think of what their losses would be today. They probably would have blown up by now. You would think they would at least send us a thank you note.

Gold has become the talk of the town with the Muppets and their guests on CNBC. All of a sudden gold is a reasonable, sound investment and they offer reasons of the day why. Most of their explanations were valid $500 ago. Where have they been?

Gold’s time has come in terms of acceptance. It has only just begun with the general public. It is the BIG MONEY who is onboard. The little guy is afraid to buy at these levels because the price has run so much. That is all to come.

Suddenly there is a building understanding that gold can move higher without the dollar moving lower. How long has the GATA camp been pounding away on that one? Had to bring that up one more time.

The gold price has been affected by the DOW of late. Markets trade in sync with other markets until they don’t. At some point the DOW is going to get battered as financial crisis concerns re-emerge. This will effect a “crisis bid” for gold and the two will part company in terms of trading together … which appears to have started already.

Should this be true, gold will go ballistic an any sort of confirmation …

Max Keiser and Germany buying GoldThe ‘K Man’ reported yesterday on his new show The Keiser Report (from 7.30mins) his contacts at the Bundesbank have told him that Germany will announce they are buying gold! The video is at www.maxkeiser.com

Legendary hedge fund traders David Einhorn, Paul Tudor Jones, and John Paulson have recently made moves into gold. Our camp has ridden the gold ride up for the last nine years. It has been very rewarding, yet a grind. My bet is more money will be made with bullion and the shares in the coming year than was made during the last decade.

This money will be made by the likes of those traders mentioned and momentum traders. Many veteran gold and silver investors will be out of the market and will not make the “easy money.”

The yield on the 10 yr T note is 3.36%. The dollar rose .39 to 75.68. The euro fell .0052 to 1.4861 and the pound lost .0157 to 1.6424. Crude oil fell 74 cents per barrel to $76.72. The CRB rose .31 to 274.58.

More gold goodies:Thursday, November 19, 2009

Year end gold melt-up coming?Wednesday’s erosion of NY session gold from a high up some $13 to an up $1.80 close for Dec gold at $1,141.20, as expected involved huge volume – 222,574 lots, 15.4% above estimate. Days above 200,000 are quite rare – at a glance, only 15 this year. This is the second this week, and today was likely another. Things are heating up.

If Wednesday was, as I suggested, a tactical victory for the bears, today was one for the Bulls – and possibly a strategic one. Under pressure from the European open, gold attempted a rally going into the floor session start, which was strongly opposed. Estimated volume at 9AM NY was a very heavy 65,684 lots, the move peaked at 9-15 AM, and estimated volume at 10AM was a very unusually heavy 97,924 contracts.

This peak was followed by a brutal attack. By 11-05 AM some $11 had been sliced off (to down $11.20 on the day).

At this point, with European influence fading, an immensely powerful rally began, such that by the floor close gold was back to the session high. Subsequently it added another $3 by the stock market close. Dec gold closed up 70c at $1,141.90. Estimated volume was an enormous 203,378 – actual will probably be one of the highest of the year. Conspicuously, over 30,000 lots traded in the last 30 minutes, with gold losing $1.

A huge battle is being fought here. Long time observers of gold will recognize that post-European NY strength, and particularly the ability to reject a final sell-off, is something very new. Traditionally later NY hours are Bear country.

For once, the gold shares were somewhat appreciative. Having troughed down 3.3% and 2.8% on the day, the HUI and the XAU closed up 0.72% and 0.63% respectively. The CEF bullion vehicle almost doubled its premium to NAV to 8.2%.

MarketVane’s Bullish Consensus for gold, the HGNSI and the GLD ETF were all unchanged at 86%, 68% and 1,117.49266 tonnes respectively.

In a fine discussion posted on the JSMineset site, Dan Norcini analyses what he has previously called the “Swiss Stair” formation observable in the gold price:

Clearly, there are powerful forces in NY long gold. Given the year-end market grooming habits of this community, a gold price melt up into the end of the year is looking increasingly possible. A call for delivery of the Dec $1,200 options (expiring Monday) is possible. This is certainly no time to be short.

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Friday, November 20, 2009

Bears have a problemIndian ex-duty premiums: AM $2.56, PM $2.61, with world gold at $1,144.30 and $1,142.60. Adequate for legal imports. The rupee firmed slightly, closing at $1= R46.6 (Thursday R46.685). The stock market gained 1.41%, a third week of gains.

As noted last night, Vietnam local gold stood at a $26.58 premium to world gold of $1,140.20 early this morning (late Thursday $30.75/$1,142.11).

Although the TOCOM public shaved a further 0.89 tonnes from its long, open interest rose 0.72 tonnes (232 Comex) on day session volume equivalent to 11,564 Comex lots. The active contract lost 8 yen but world gold went out some $5.20 above the NY floor close having gained some $2.80 during the session. Japan will be closed on Monday.

The Russian Central Bank has reported adding 15.5 tonnes (500,000 ozs) to its reserves in October, bringing them to 19.5Mm 0zs (606.6 tonnes). Most likely the purchases were from domestic producers and from Gokhran, the state agency reported to be intending to sell some time ago.

The preliminary CME report for Thursday indicates that volume was 253,364 lots, at a glance the 6th highest this year and 24.6% above estimate. Admittedly this is swollen by switches but so were the other month ends. At a glance this is the 6th highest this year (a revision is possible).Serious forces are at play.

Today gold gave ground on the Asian open from the late NY high, but then rallied into the European start to peak up $6.20. Downward pressure (closely matched in Euro terms) produced a low of down $9.40 just before the Comex floor open and an interesting rally is now underway. Estimated volume at 9AM is again gigantic – 96,527 contracts.

With the physical markets in the posture they are, the bears have a problem.

CARTEL CAPITULATION WATCHThe recovered from early losses to only close down 14 to 10,318. The DOG fell 11 to 2146.

Early market news:
07:47 Market update: SPZ moves lower on rumors of Ukraine default on sovereign debt Unconfirmed, Ukranian Railway has defaulted on on a Barclays bond, and also has another government-guaranteed obligation with Deutsche. If Deutsche were to accelerate the payment, and were the obligation not to be paid, it would be considered a government default. None of this information is confirmed, but it is being circulated and contributing to the aformentioned Ukraine concerns * * * * *

•Europe indices have also moved to session lows The moves appear attributable to comments from Zhang Ping, chairman of the National Development and Reform Commission which crossed just after 7 ET. Zhang says domestic demand growth is not strong enough, that China’s economic recovery is not solid, and that China still has an industrial overcapacity problem. Zhang says China’s external and domestic situation is complicated

U.S. economic news: U.S. Q3 seen revised down on widening trade deficit

WASHINGTON (Reuters) – The U.S. economy’s return to growth in the third quarter was less brisk than previously thought as the trade deficit worsened and companies still aggressively cut inventories, a Reuters survey predicted. The poll of 66 economists forecast real gross domestic product growth would be revised down to an annualized rate of 2.9 percent from the 3.5 percent pace reported by the government last month. It will still be the first expansion after four quarters of decline. Recent data, ranging from the trade balance to business inventories, have suggested the government’s initial estimates on output were a bit on the optimistic side.

“Among the components, we look for the revisions to show a wider trade deficit, a bigger decline in nonresidential structures investment, slightly softer consumer spending growth, and a bigger contraction in inventories,” wrote economists at Barclays Capital.

“Despite the likely downward revision, we still believe that the third quarter will prove to be the first quarter of recovery and that it demonstrates a decisive turn in the economy.”

The U.S. trade deficit widened to $36.5 billion in September from $30.8 billion the previous month. Both exports and imports recorded their best month since December 2008. The Commerce Department will release its second estimate of third-quarter GDP on Tuesday. The revisions have already been priced by the market and are unlikely to generate too much interest in a holiday-shortened trading week. However, traders will keep on eye on the advance estimates on corporate profits to be released together with the GDP report. Aggressive cost cutting, mostly head count reduction, has seen companies reporting strong earnings. The survey forecast after tax corporate profits surging 6.2 percent in the third quarter after rising 0.9 percent in the April-June period.

WASHINGTON — The Federal Reserve’s shield from congressional audits of interest-rate decisions took a blow from lawmakers who want to open the central bank’s books to greater congressional scrutiny. The House Financial Services Committee yesterday advanced a proposal to remove a three-decade ban on audits of monetary policy and carry out an examination of the central bank. The plan was offered by U.S. Rep. Ron Paul, a Republican from Texas who has called for the abolition of the Fed, and based on a bill with more than 300 co-sponsors…

Yesterday’s vote is “probably not going to be helpful in terms of keeping inflation expectations low and supporting the dollar,” said Michael Feroli, a JPMorgan Chase & Co. economist in New York and former Fed researcher. The central bank “should do whatever it takes to stop this from going forward and eroding confidence in the Fed’s independence,” he said.

To all; the above link is a fictional account by John Galt about “the day the Dollar died”. This is a MUST READ as I believe this “fictional” account is very very close to what will actually happen. I have written many times about the “many pieces” that this essay puts together so well. Market and bank closures, ATM’s and credit cards not functioning, store shelves being stripped bare, precious metals becoming unnatainable, the unacceptance of the Dollar by foreigners and of course social unrest, I think it is all coming and very soon.

You can believe this is “doom and gloom” and/or laugh at it. The ultimate collapse of the Dollar in my opinion is a certainty and a mathematical one at that. Can we get one last “short covering rally” in the Dollar? Yes, I believe we can. Is it worth trying to trade? I don’t believe the risk reward is worth it because if you are wrong and the “day” arrives when you are “out” of your precious metals, it will spell long term financial disaster. Call me a “doom and gloomer” or whatever you like, those of you who know me or have read my past ramblings know that though I haven’t been 100% correct or my timing has been early, I have generally been on the right track with my “smeller”.

I see this fictional piece by Mr. Galt as correct in both substance and timing. Between Chinese/U.S. financial tensions, fake Gold turning up, massive paper claims to a very finite precious metal supply, the looting of the U.S. Treasury and Congressional idiocy, over $1 Quadrillion of derivatives globally, foreclosures, bankruptcies, teetering balance sheets from Joe Blow to the U.S. Treasury, massive fraud, and of course no paper currency on Earth having any real backing of any substance, it all adds up to the perfect financial storm! Please read the above link and act accordingly! The raw math not to mention common sense says the storm is coming! Regards, Bill H.

U.S. Economy U.S. Stock Market Echo Bubble Risks A Mendacious Fed Playing With Fire?From: Frank Veneroso, November 20, 2009

Executive Summary: The Fed denies there are bubbles. It refuses to share in any of the concerns of officials around the world that there are emerging bubbles. On the day of the last Fed meeting Pimco’s El Erian said the markets do not want the Fed to talk about bubbles. The Fed accommodated the market’s desires, and has since accommodated in repeated public statements. Nonetheless, there is a storm of controversy over whether the Fed is blowing bubbles. I think the market does not believe the Fed, and market participants are buying risk assets as a consequence.

I am beginning to think that market participants think the Fed and its ministrations are like the doctors of Anna Nicole Smith and Michael Jackson. If this is true I think the stock market is a dangerous place indeed. Maybe the Fed’s efforts to lift asset prices and thereby the economy will work. Maybe via rising equity market wealth the well-to-do will pull the economy up by its bootstraps. But to count on the cooperation of the leveraged speculators of the bubble era to overcome debt deflation dynamics posed by a sky-high ratio of private non financial debt to GDP is playing with fire. It is like the dying Roman Empire trying to enlist Attila the Hun as a mercenary.

If at some point those leveraged speculators think you might not succeed or cannot succeed they will start to sell. Given downside price action they will increasingly question the Fed’s ability to resuscitate bubbles. The consequent loss of Fed credibility as Master Bubble Blower could lead to panic selling and an onslaught by the shorts that will leave the stock market and aggregate wealth in a much worse condition than if the Fed had not engaged in its dangerous game.

GOLD/SILVER
What could be more gold friendly? From The King Report late last night:

On Thursday, January and February T-Bills went negative (-0.03% yield) and the six-month Bill fell to.12 (.175 on Tuesday), the lowest six-month yield since 1958. A tad worse Initial Jobless Claims could not produce this havoc. Conventional wisdom says it’s year end window dressing. But why Bills?

If you want to park cash, why not place it in some short-term paper with a positive yield? So also thosepundits that exclaim there is no problem are not correct. If there were no concerns, the cash would noteagerly run to a negative yield vehicle.

The FT on negative T-Bill rates: Short-term US interest rates turned negative on Thursday as banks frantically stockpiled government securities in order to polish their balance sheets for the end of the year. The development highlighted the continuing distortions in the financial system more than a year after Lehman Brothers’ failure triggered a global crisis. The growing appetite for short-term government debt reflects an effort by banks to present pristine year-end balance sheets to regulators and investors…

China gold BLOWOUT: Demand for the metal surging Friday, November 20, 2009By Daily Crux Editor Justin Brill: Chinese consumer demand for gold continues to grow. It reached record levels in the third quarter of the year, as demand for jewelry and other items celebrating the 60th anniversary of the founding of the communist state added to already high investment demand. In all, Chinese consumers bought up an astonishing 120 tons of gold, up over 12% compared to last year, even as total world demand fell. The Chinese continue to buy up the world’s gold as much of the western world sits idle. You’d be wise to consider buying gold now, before the rest of world wakes up and joins China…

Just one day after having the first movement in silver in the dealer inventory in many days we are back to zero movement! The movement in gold was quite significant, but NOT in the dealer inventory which saw no movement, it was 52Kozs were deposited in the customer inventory.

There were 2 delivery notices issued in the NOV gold contract. The NOV contract total for the month is 956 contracts or 95,600 ozs. Bank of Nova Scotia stopped 2 of the notices today.

There were no delivery notices issued in the NOV silver contract. The total delivery notices for the month in silver stand at 146 or 0.73 Mozs

There is only 0.7 cent of contango in silver NOV/DEC contracts and only 2.1 cents NOV/JAN contracts. The contango in gold NOV/DEC is at only $0.4 and $1.2 for NOV/JAN

The Cartel tried to instigate yet another sell off and failed yet again. Yesterday I said “The Cavalry didn’t come today either! How stupid can the shorts be? This market is NOT going down. There are no limits on the COMEX for price moves. The cartel groupies have been making money with the same old formula for 15 years…just follow the Cartel. That works fine until the day it doesn’t. They could lose 15 years of profits in a heartbeat, not to mention part of their anatomy to boot”

One more time again the Cavalry didn’t come. General Custer’s Cartel is looking very lonely. As I have said for many weeks this is a Commercial Signal Failure of epic proportions. It will be something to tell your grandchildren about. Of course, your grandchildren will be much more impressed when you tell the story if you were on the long side! Cheers Adrian

My Bloomberg interview with Bernie Lo was much fun last night. He really is a class act and a wonderful host. There is little doubt in my mind he knows how right GATA has been. I would like to thank the Café members who took the time to get us some archived copy of the interview. The volume on each needs to be turned WAY UP to your highest level.

Dear Chris and Bill, I have succeeded in recording Bill’s interview with Bernie Lo to my computer and I have edited the show, cutting out all the irrelevant parts that have nothing to do with Bill. The recording then became about 21 minutes in length. I have made it into three parts each about 7 minutes in length for uploading to YouTube. Right now the files are being uploaded and it will take about an hour and a half for the files to finish uploading as I have produced them in a reasonably good quality. Each file is about 80 megabytes in size and even though I have high speed broadband, the files are uploading quite slowly. It is 12.36 am here right now so I am going to bed as it is past midnight. I will check in the morning if everything went alright with the uploads. I have given the titles of the videos: Bernie Lo Interviews Bill Murphy Nov 2009 Part1, Part2, Part3 Hope all goes well. Cheers Cary…

There is a fair shot, based on market developments, GATA’s time is here. I urge Café members to take a little time and send the Bloomberg interview to various media outlets, especially to the producers of the major financial TV shows and financial print journalists. Ask them if they want to really make some news and get the real gold story out there, to take a few minutes and review the Bloomberg GATA interview.

The GATA gang has put more than a decade of effort into exposing The Gold Cartel. It is time they get their due.

How many times have we seen silver and the shares under pressure when The Gold Cartel is having trouble containing the gold price? Chalk up another one today. At the same time, it proved to be another tactic that failed. Silver is now up 9 cents on the day in the Access Market and the HUI has come back from a 464 low to close at 472.64, down 4.60. The XAU lost 1.57 to 184.28.

ONCE AGAIN, for something like the last 20 out 21 days, gold is up in the Access Market, going $1050 bid. Can you feel The Gold Cartel and other shorts squirming? Can our serious Commercial Signal Failure be far off? What fun!

Murph: ”Never underestimate the replacement power of equities within the REFLATIONARY SPIRAL” Read the Investment Outlook by Pimco’s Bill Gross where he makes the following comment:

“The Fed is trying to reflate the U.S. economy. The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher-risk bonds or stocks. Once your cash has recapitalized and revitalized corporate America and homeowners, well, then the Fed will start to be concerned about inflation – not until.” The full text is found here…

Bill Murphy is chairman of the Gold Anti-Trust Action Committee and proprietor of http://www.LeMetropoleCafe.com, an Internet site devoted to financial commentary with emphasis on the precious metals. He has also chaired three international gold conferences: *The GATA African Gold Summit in Durban, South Africa on May 10, 2001. *Gold Rush 21 in the Yukon’s Dawson City on August 8-10, 2005. *GATA Goes To Washington in Arlington, Virginia on April 17-19, 2008.